With the peak summer travel season beginning, Air Canada could be hit by a strike of its 3,800 customer service agents.

Check-in staff at Air Canada could be walking the picket line at midnight Monday, June 13, 2011.

By:Vanessa LuBusiness Reporter, Published on Wed Jun 08 2011

After years of sacrifices to help the struggling airline, Air Canada’s 3,800 customer service agents are gearing for a fight, threatening a strike at midnight Monday night.

The Canadian Auto Workers union is meeting with the company at a downtown Toronto hotel in hopes of averting a strike.

“We still have major mountains to climb here,” said Bob Chernecki, assistant to CAW national president Ken Lewenza. “At this point, we’re not feeling very positive about the direction of it, but we’ll see.”

Two big issues are a proposed discount airline and pension changes. The low-cost carrier would fly to vacation destinations down south and to Europe that would require lower wages and different work rules. The company wants significant pension changes including switching to a defined contribution pension plan for new hires from the current defined benefit plan, which has a guaranteed payout.

“It’s not happening in our union,” Chernecki said, noting the company knows those pension changes are a no go. “It will absolutely put this in a ditch.”

Another non-starter is the discount carrier, which was resoundingly rejected by pilots who recently voted down a tentative deal. Rank-and-file pilots were so upset by those plans that they ousted four union officials. Internal elections are being held now, and bargaining will likely resume next month.

Under federal law, the CAW would need to give 72 hours’ notice on Friday that it plans to walk off the job at 11:59 p.m. Monday. It has scheduled a rally at Pearson airport on Thursday to show management that the union is serious and members are united, getting a 98 per cent strike mandate.

Talks are scheduled through the weekend, and Air Canada spokesman Peter Fitzpatrick said the immediate focus is getting an agreement.

“Customers can continue to book with confidence, and carry on with their travel plans,” he said. “We think that we’ll reach a settlement. We’re focused on that.”

However, in the event of a walkout, the company has contingencies in place and plans to operate a full schedule, Fitzpatrick added.

It is unclear whether other unions including pilots, flight attendants and mechanics could create chaos by slowing down at picket lines or refusing to cross at all.

The CAW is fighting concessions, including classification changes, but it also wants to make some real progress for employees who have had a wage freeze in the last two years. Taking inflation into account, the union argues real wages have fallen 10 per cent in the past decade.

“The workers have had enough of this ‘Woe is me’ story from Air Canada,” said Chernecki, noting top executives are getting lucrative compensation packages including president and CEO Calin Rovinescu whose total compensation last year was $4.5 million, up from $2.6 million in 2009.

Air Canada is hoping for labour peace as it heads into the busy summer season, when it makes most of its money, but employees clearly aren’t happy.

The pilots’ union is still figuring out it next steps, while the Canadian Union of Public Employees, which represents flight attendants, filed for conciliation last week, starting the countdown to a legal strike position in late August.

The International Association of Machinists and Aerospace Workers, which represents maintenance workers and ground crews, is also in contract talks for Air Canada workers as well as those spun off into another unit, Aveos.

Pensions are a sensitive issue for the unionized staff at Air Canada because back in 2009, when it looked like the airline might seek bankruptcy protection again, the unions agreed to give the airline some breathing room by delaying pension payments for a 21-month period and fixed payments in 2011, 2012 and 2013.

Air Canada has about $13 billion of pension commitments and as of Jan. 1, 2011, it was underfunded by about $2.1 billion, about $600 million better than a year earlier due to a strong fund performance in 2010.

However, the company says the shortfall is too high. The company paid $180 million into the pension last year, and is scheduled to make retroactive payments this year for a total of $320 million. By 2014, Air Canada could be required to make $550 million of payments for both current and past service if the deficit remains at current levels.

The industry’s recovery remains fragile as fuel prices have risen, adding an estimated $800 million to Air Canada’s operating costs this year.

The carrier reported an operating loss of $66 million in the first quarter that ended March 31, compared with a $136 million operating loss in the first quarter of 2010.

Air Canada’s flight path

• On the brink of bankruptcy, in April 2003, Air Canada sought protection from its creditors and emerged from the Companies' Creditors Arrangement Act in October 2004.

• Through restructuring, unions made various concessions to help the airline that including wage cuts and changes to work rules. Layoffs also occurred.

• CAW members gave up one week of vacation, paid 30 minute lunch and sick days.

• In 2003, for 60 days, they took a 10 per cent wage cut. They took a 2.5 per cent wage cut for 2004 and 2005.

• While CAW members got modest increases from 2006 to 2008, under the threat of more restructuring, they took wage freezes for 2009 and 2010.

Source: Star library, CAW Local 2002

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